Mnuchin promises US tax reform and 3% growth rate

The new US Treasury secretary, Steven Mnuchin, said the Trump administration is committed to passing a “very significant” tax reform plan by August and promised an economic growth rate of at least 3 per cent.

The former Goldman Sachs banker and film financier, who was confirmed by the Senate last week, said on Thursday morning that he expected the administration’s plans for a tax overhaul, coupled with a curb on regulations, to boost the US economic growth pace to 3 per cent “or more” — potentially as early as next year.

“We have underperformed where we need to be,” he said in an interview with the CNBC network, referring to the US economic trajectory under the administration of Barack Obama.

The world’s biggest developed economy grew 1.6 per cent in 2016, and economists surveyed by Bloomberg are expecting a pick-up to 2.3 per cent this year and in 2018.

Beyond tax reform, Mr Mnuchin said the administration was also committed to reviewing regulations on banks to ensure they were able to lend to individuals and small businesses.

The remarks echoed rhetoric from President Donald Trump, who has said the Dodd-Frank legislation had strangled the financial industry and hampered economic growth.

“There’s an incredible amount of liquidity out there and we want to make sure banks put it to work,” Mr Mnuchin said.

He also raised the prospect of issuing government bonds with maturities of 50 to 100 years. He said that the US Treasury would consider the idea of selling debt at longer maturities than 30 years, calling the concept a “serious issue”.

Staff at the Treasury would explore the idea of launching 50 to 100-year bonds, he said, but it had not yet made a formal decision on the matter.

Ultra-long bonds have already become popular in Europe amid a period of historically low bond yields.

The $14tn US Treasuries market is the biggest and the most actively traded in the world. The country has extended the average maturity of US bonds to five years and nine months by the end of 2016, from four years and seven months ahead of the financial crisis, according to Bloomberg data.

On opening on Thursday morning in New York, stock futures were modestly higher, the dollar was down 0.1 per cent against a basket of six currencies, and Treasury yields were slightly weaker.